Stacy upgraded her advertising and had an effective showing at a wedding show. She's meeting with a Pinterest bride that brought a photo of a 31" mercury vase to her and said that she wants that vase for her centerpieces. Stacy does rentals but doesn't own any of these vases. Should she just charge the bride the full purchase price since they're new or should she give her a reduced price and try to rent them again?
It's a question that plagues many florists. "I have to buy some vases…now what do I charge for them? I don't want to charge too much, but I do want to make sure I'm getting value for them." For many event professionals, it's been simply a guessing game. For others, they ask on various forums what the industry standard is. Here's our suggested formula for how to determine your rental item costs.
The Basic Formula
Let’s start off by looking at an item that you’re only selling once and never using again: a pre-built birch bark arbor that the couple wants to keep. We'll imagine that you have a source that can build them for you for $500.
Using your markup from the markup calculation post, let’s assume that you have a markup of 250% to get what you need in profit. Based on $500 * 2.5 (250%), you should charge $1,250 for this arbor. That’s $500 for the product and $750 for profit. $1,250 is a lot of dough for someone to spend on an arbor. But they’re wanting to keep it and you can’t sacrifice your profit that you would make other places. However, this isn't the case in most situations.
Calculate How Many Uses
So, let’s look at the same situation now, but in consultation situation that would be more realistic. Your bride wants a custom birch bark arbor made (that will cost you $500) but she doesn't want to keep it afterwards. Based on the style, you estimate that you can sell this a total of 5 times. Let's revisit our basic formula to determine our profit needed:
$500 * 2.5 = $1,250
Now divide by how many times you can sell it:
$1,250 / 5 = $250
So, this is the core formula you should use.
Cost multiplied by markup then divided by the number of times of usage.
Let's try another example. You purchase 31" mercury vases for $80/ea and you estimated you can use them 10 times before they start peeling. Your markup is 300%.
$80 * 3 / 10 = $24
We've put together a calculator to help our readers do quick calculations on their new rental items. Enjoy!
There are further considerations that you need as well.
- Be sure that you estimate your usage on three factors: the number of opportunities you'll have to resell (weddings and events), the style and salability of the piece, and the durability of the piece.
- You'll want to weigh in storage space into the formula as well. For florals and hardgoods (sundries), you take them to the event and never have to mess with them again. With rentals, you've got to have storage space. If it's a large item and will be taking up space in your storage area, make sure that you're adding that in addition to your markup.
- While you want to make the most profit, some times purchasing quality products allows you to lengthen their life. This may seem like a bad thing as you get less profit each use the longer it's around. The upside is that you're able to provide even more beautiful experiences for your clients for a more affordable rate if you're able to use them for a longer life.
- This formula doesn't add in the costs to delivery and set up the rentals on site. So you can either build in this price into your markup or you can make sure that your labor and delivery charges are added to your rentals.
- This formula doesn't take into account the number of days rented and treats each rental as a one-time rental fee. If you charge your rentals for each day of rental, adjust the number of rental times according to that.
What is Curate? It's a proposal creation software made specifically for event professionals to help ensure they're accurately pricing their rental items in their proposals.